Airplanes," George Labovitz is fond of saying, "want to fly. It's people who crash airplanes. Student pilots. And 9 times out of 10, it's because they over-control."

Labovitz should know. Before he became a psychologist, he was an Air Force pilot, and he still does a lot of flying, mostly in other people's airplanes. "Oh, maybe 40%, 50% of the time he's on the road," says Joan Fallon, his secretary at Organizational Dynamics Inc., the Burlington, Mass.-based consulting firm he founded in 1970, which has twice (in 1982 and 1983) made the INC. 500 ranking of America's fastest-growing private companies. ODI currently has offices in Chicago; San Francisco; Washington, D.C.; Pittsburgh; Minneapolis; Dallas; Spartanburg, S.C.; Paris; Brussels; and Oxford, England. Geographically, his clients are equally far-flung, although economically they tend to cluster among the major corporations of our time -- TRW, Motorola, Union Camp, Marriott, Florida Power & Light, the United States Air Force, Hospital Corp. of America, and Massachusetts General Hospital, to name a few.

Does he overcontrol? Back at ODI headquarters along Massachusetts Route 128, a growth zone studded with new office buildings but still shuddering with the groans of bulldozers, his 50 employees say, No, he doesn't overcontrol. Rather he trims -- sets directions and tone, sparks enthusiasm and ideas. In the old days, "Contact!" was the last word pilots would hear from the ground crews before takeoff.It could be Labovitz's rallying cry, too, both as a manager and as an adviser to managers. Make contact. Get out there among your people. Listen. Learn. Trim. Then let them fly.

Born and reared in Lynn, Mass., a suburb of Boston, Labovitz, 45 years old, went to Boston University, got his MBA from Boston College, then ventured out to Ohio State University for his PhD in organizational psychology. He started up ODI in 1970. At first it was a solo operation, more or less, with Labovitz inventing, selling, and delivering his own consulting services, occasionally sending out an ad hoc collaborator. In 1976, he began hiring his first full-time employees. Often they were his graduate students at Boston University School of Management, where he has been professor of organizational behavior and management since 1968. (He still manages to teach two courses a semester when he is not on sabbatical, as he is this year.)

Since then, ODI has grown apace on the strength of a series of video- and text-based management courses, supplemented with personal consulting. In the past five years, business has been especially brisk. Revenues have climbed from $1.2 million in 1980 to $2.3 million in 1982 to $5.1 million in 1985; employees from 6 to 15 to 50; office space from 1,200 square feet to 2,200 to 8,000. Labovitz admits that such growth has occasionally put some strain on his philosophy of management, but his employees insist that the strain never shows.

Well, almost never. "He's a jogger," says Victor Rosansky, vice-president for training and development. "Apparently, he gets his best ideas while running, and we can tell. He comes in here after a run, and pretty soon the place is swirling. There are days when we pray for bad weather."

In public, too, Labovitz is a whirlwind of ideas, stories, and aphorisms, and he is as popular on campus as in corporate offices. So popular that, in 1979, he received Boston University's highest teaching award, the Metcalf Cup and Prize, which is presented each year to the outstanding teacher from among the 2,500-member faculty.

If there is a theme to Labovitz's teaching, and there is, it is that -- in grappling with problems of productivity, quality, and organization -- managers must learn to recognize the truth of Pogo's old saying: "We have met the enemy, and it is us." Not the workers, not middle management -- top management. And why is top management its own worst enemy? Overcontrol, says Labovitz. "Around here," he quotes an executive he met once, "it's easier to get for-giveness than permission." Labovitz's message is that, to survive in a dynamic economy, managers will have to learn how to do both.

INC.: Let's start with traditional notions of organization and management. What exactly is wrong with the old-fashioned pyramid?

LABOVITZ: Nothing, I suppose, unless you happen to be in a competitive environment. It certainly has a long history.

INC.: What do you mean?

LABOVITZ: Well, I'd argue that management is the oldest profession, or maybe the second oldest. You really can't have civilization without management. You can't hunt, you can't kill, you can't burn until one human being tells somebody else what to do. That's management, and there's a certain logic to the way it's evolved over the ages. You remember the movie The Ten Commandments? That's the way that I generally explain classical management theory.

INC.: How's that?

LABOVITZ: Well, part of that movie was actually a management training film, beginning with the V.P. -- that's Vincent Price. He's the architect who gets the telex from Pharoah to build a pyramid. Slave comes in with tablet, falls at Vincent's feet, and on the tablet it says, "Build me a pyramid, the 60-40 model, no later than June 1257 B.C." So what do you do, if you're Vincent? You say to yourself, "Gosh, that 60-40 pyramid is a big model, a 30,000-slave model. First, I've got to get a general." Why a general? Because you need somebody to go to Mesopotamia and bring you back 30,000 slaves. You don't know how to do that: You're an architect. Then you've got to get a director of slaves, because you're not a slave driver, either. And then you'll need an expert on materials management, because you'll have to find an awful lot of rocks for this pyramid.

So already you've broken the work down into logical chunks -- design, recruitment, production, and materials -- and assigned them to different people. Sure, there are 29,996 job slots left to fill, but your slave manager will take care of that. He'll break it into chunks, too -- three shifts, supervisors for each 200 slaves, subordinate supervisors for each 25 slaves, and so on. Basic Management 101, right?

Okay. Now cut to the result of all this planning. Long shot of 30,000 slaves building this pyramid out in the desert someplace. Intermediate shot of 200 slaves lugging a huge block of stone up the sides of the pyramid. Tight shot of slave's naked back being whipped by supervisor. Swish. At this point, the managers in my audience usually have tears in their eyes. Of glee. It's beautiful. There's no union. Productivity is high.There's attrition, but you can handle that. And it's all run by one guy! It's all logical. It all makes good sense.It follows basic principles that are literally thousands of years old.

But that stuff is still in every corporate office in America. And it's okay, too, so long as you're building pyramids, and nobody's building them cheaper on the other side of town, and you've got three generations to do it in. But most modern businesses can't function like that, although you might be surprised how many try.

INC.: So what's the alternative?

LABOVITZ: We call it participative management. But you could also call it quality circles, or problem-solving skills, or management by wandering around, or all of the above. It's basically the opposite of the Vincent Price approach. It involves pushing certain responsibilities way down as far as they can go -- down to where the real experts are, the people who have been doing the jobs for years. And then we teach those people how to think about the problems that come up, how to find doable solutions, how to submit their solutions to cost-benefit analysis, and how to keep score on whether the solutions really are solutions. We have programs for each step of the process: seminars, videotapes, books; but really it's just common sense.

INC.: If it's common sense, why do companies need to hire you?

LABOVITZ: They don't. We tell them that all the time. I remember a few years ago, there was this story about the incredible turnaround at GM's North Tarrytown, N.Y., plant. It was a mess, that plant: strikes, lously quality, 2,000 outstanding labor grievances, 35% of the welding was defective, 7% of the workers failed to show up for work every day. After the turnaround, there were 20 outstanding grievances; the percentage of bad welds dropped to 1.5%; absenteeism went down to 1%. What happened? Did they call in ODI? No. What happened was, they did a survey to find out why the windshields were leaking in the cars, because one of the many complaints about lousy quality was leaky windshields. Well, they found out that on one shift on one line, the windshields never leaked. So management went down to figure out what those workers were doing right, and what they discovered, of course, was that the workers were doing it all wrong. That is, they weren't following the standard operating procedures. Instead of putting in the windshield top first, they were doing it bottom first, and then one of the workers was adding a little extra adhesive, a little puddle, along the bottom. And management said, "Why are you doing that?" And the workers said, "Because if you don't add this puddle of adhesive, the windshields will leak."

Well, management liked this idea so much -- I mean, consulting the workers on problems they were having -- that they began a process of bringing other workers together to work on other kinds of problems. Quality improved, and they got the added benefit of absenteeism dropping down because people enjoyed coming to work more.

INC.: So what keeps other companies from doing the same thing?

LABOVITZ: In a lot of companies, there are terrific cultural and psychological barriers that get in the way of common sense. After all, pyramid-type thinking has been a part of the culture for thousands of years. I remember having lunch in the executive dining room of one of our English clients recently. Very elaborate menu. Good cognac. We were chatting until 3:30 in the afternoon. Meanwhile, down on the shop floor, the workers had precisely half an hour to eat their lunch at their work-stations. First-line supervisors had their own little first-line supervisor place to eat. Middle managers could go out and eat at a pub. Senior managers had an in-house cafeteria with a bar. Meanwhile, there we were up in the executive dining room sipping brandy until 3:30 p.m. This has been the traditional way of structuring organizations, even in America, which is the most egalitarian of countries. But you can't organize things in this way, not for long, without everybody beginning to identify with those who are most like themselves: workers with workers, first-line supervisors with first-line supervisors, top executives with top executives -- nobody with the company as a whole. And this is not a positive thing; it is a negative and hostile thing. Because we do not remain neutral with respect to people who are not like us. We are threatened by such people. We call them names. And the barriers go up.

INC.: Most of your clients are large companies. Is that because small companies know all this already?

LABOVITZ: Well, I'm not so sure they're conscious of it, but they end up doing it anyway, as a function of their size. I mean, most entrepreneurs, they can't sneeze without everyone saying, "Gesundheit." Second, it's their business, so they have a personal interest in everything that's going on. It isn't that they go around saying to themselves that they need to be a "symbolic integrator" of the organization. It isn't that they have to force themselves to bring people together in a "problemsolving session." They just do it naturally. I know of a plastic company that's near here. It was started by four or five brothers, and naturally the senior management is well integrated. I mean they eat together, they buy their suits together. So they're doing the right thing, but backing into it, without any real strategy.

INC.: But what happens when the business starts to grow? Take your own company, ODI.

LABOVITZ: Good example. Until about a year ago, I really knew what was going on here. I knew exactly who we were marketing to, what the issues were, and what I wanted. Now that's become impossible. We've expanded; we're in different markets, different people, different languages. So I find that I'm more and more forced to delegate more and more of the technical stuff. For instance, we've hired a director of marketing, and yesterday the guy came in here to discuss an advertisment. I didn't like the ad. We discussed it, and I was tempted to say, inside myself I was saying: "I pay your salary. Write this goddamned ad the way I want it written!" But I didn't do that. Instead, I told myself that I had hired this very competent guy because I wanted his judgment. He's smarter at this than I am. If I'd been able to write all the ads, I wouldn't need him. But I won't pretend that it made me happy; I was really very reluctant. But then I figured, The hell with it: It's his problem, and I'm paying him to solve it. So I can let go. But it's painful.

INC.: But surely there's a point where his problem is your problem, too? Suppose the ad copy raised basic questions in your mind about the positioning of the company in the marketplace?

LABOVITZ: Ah, but that's where I draw the critical line between letting go and stepping in. Participative management is not democratic management, as some people think. I don't want to manage this place democratically. I don't want to put it to a vote to see if everybody will sell the product today. I'm the boss. Three years ago, for example, 90% of this business was videotapes and texts, mostly videotapes. Which meant me on the videotapes. So I decided to move the strategic thrust of the company away from that into consulting, so if I got hit by a bus we wouldn't all be dead. I was the one who made that decision. There were people who weren't thrilled by it, but it was my right and my responsibility.

The marketing guy is a different story, though. I mean, when he came in here yesterday with that ad, I knew two things about him. One was that the last ad he'd written, which I also thought was awful, had drawn more response than any ad we'd ever put out. The other was that he had been here for only six months; he was still getting a feel for the company. So where do I draw the line? On the one hand, I know the values I want to push with this company, which I've also got to push with the employees. That's my right. On the other hand, this guy is smarter than I am. His right is to participate in the design of the system that affects him. If it bongs, it's his problem. But you're right, it's also my problem: There are places where I have to draw the line and say, "That's not the way I want to do business."

INC.: So the boss becomes the guardian of the values?

LABOVITZ: That's a big part of it. You want to internalize those values in your people. The American Red Cross was a client of ours, for example. We ran them through a course on performance management that we developed for them, and at the end of it, the client comes to our vice-president in charge of the deal and asks him for eight more days. For free. They didn't have any more money. They said they were a volunteer organization. Would we volunteer the eight days? So our guy takes a napkin and writes on it, "ODI owes you eight days of consulting." Now that's a $20,000 napkin, but to me it's also a reflection of the fact that my values are out there. He made the decision, but it's the decision I would make if I were there.

On the other hand I don't want to give you the impression that we teach laissez faire management around here. You have to be tough. You've got to have an iron bottom. You've got to keep people managed and focused on the problems you want them to work on.

INC.: So isn't all this meaningless? Aren't you saying to these subordinates, "You're free to make mistakes, but only inconsequential ones"?

LABOVITZ: No. There's a big difference between trivial mistakes, consequential mistakes, and fatal ones. You want to prevent the fatal ones; the rest you can help the guy learn from. Remember the story about Tom Watson at IBM? Some poor fellow has just made a horrendous mistake that cost the company $10 million. He gets called into Watson's office. They talk about it, then at the end of the meeting the guy says, "Aren't you going to fire me?" And Watson says, "How can I fire you now that I've just spent $10 million educating you?"

INC.: Isn't there an element of faddishness in all of this? Pushing responsibility down to the troops that do the fighting? Participative management? Management by walking around? Slogans like that have come and gone before.

LABOVITZ: There are a lot of fads in our field, I think. Remember sensitivity training? Let's all get naked and rub up against each other? Well, that was fun, but it didn't have anything to do with management, and nobody could ever prove that all those let-it-all-hang-out sessions made the organization more profitable. We make a point of defining clear, quantifiable objectives, so that our clients can see the results for themselves.

We have one client, for example, a wholesale grocer up here in Massachusetts. This guy was testing out one of our programs called Making Things Better. I told him not to pay me until he saw some savings. First we trained a small group of managers in participative management, then we went down to the warehouse floor, to the teamsters down there, and started them out on brainstorming techniques.Brainstorming is a management thing, ordinarily; you get it in any management course. Workers don't take management courses. You have to teach them to filter out the things they can't do anything about, like why they're not in the soup business. They're in the warehouse business and that's it. What things can they control? What things can they work on that everybody can participate in? What things can they do something about in a short period of time?

So they brainstormed, and they loved it. It was something they'd never done before. Not only define a problem but come together to find a solution. Nobody ever brought these guys together to sit around a table before. Oh, they talk to each other in the union hall, they talk to each other over a beer after work, they talk in the employee locker room. But they don't talk to each other about work issues, at work on company time, being paid to do it.

INC.: So what did they come up with?

LABOVITZ: They decided to focus on breakage. They're responsible for breakage in the warehouse; they stack the boxes. And the solution they came up with was ridiculously simple. They decided they could cut down on breakage by stacking the little boxes on top of the big ones.

INC.: Who made the decision to bring these people together?

LABOVITZ: The president of the company. He heard me give a speech and brought me in. But it was sort of an experiment on our part. We hadn't worked the bugs out of the program yet, so we told him we'd do it for free. Two weeks later, though, he called me and offered to pay the full $12,000 for the course. It had shown results that fast. He told us later that they saved about $600,000 in nine months.

INC.: And, before this, it had never dawned on anybody in management to bring these buys together?

LABOVITZ: It doesn't dawn on most companies. You think steelworkers get together and talk about how we can make steel better?

INC.: What's the supervisor doing?

LABOVITZ: If he's a typical supervisor, he's counting how many boxes they ship, how many they dropped. He's saying, "Gotcha. You came in late." Or, "What the hell are you doing?" Or he's taking grievances from the union.

INC.: Why?

LABOVITZ: Because that's what supervisors do in our culture and our companies.

INC.: But somebody has given some direction to that supervisor that leads him to believe that's his job.

LABOVITZ: It's always been the job. I mean, we're talking about generations of managers and generations of workers. If you go to most of the traditional industries and ask what supervisors do, they're there to kick butts and take names, to use an old Air Force expression. It's the traditional attitude of management toward the people who work there. You can see it in the physical plant. Have you ever seen an old steel mill -- the dirt, the rust, the filth, the decay? It tells you something about management's view of people all those years.

INC.: So how do you overcome that?

LABOVITZ: It takes a deliberate startegy on the part of the company to give people a chance for meaningful work. What does that mean, meaningful? It means policies and procedures that permit people to grow: career paths, so that you know, if you start out here, that you may go there, or there. It means offering opportunities to do different things, to exercise creativity, to achieve something and to be recognized for it, to be involved in the processes that are directing you. And I have to say a lot of old-line companies are doing just that.

INC.: Why do you think that's happening, at this point in history?

LABOVITZ: Among other things, I think it has to do with competition, and with the changing nature of the work force.

Let me tell you about my mother. During the Great Depression, my mother worked for $9 a week at a shoe factory in Lynn. She worked 10 hours a day, six days a week, for nine bucks. And occasionally she had to go into the shoe factory on Sunday to clean it, at no pay. As Abraham Masslow would say (he's the granddaddy of all this stuff, a great psychologist): My mother was way down there in terms of need satisfaction. Air, water, food, shelter; those were the needs she was happy to fulfill. So was everybody else. But today, obviously, people like my mother are in the minority. Everybody else is now way up here in terms of need satisfaction. They don't worry about getting enough air, water, food, shelter; they worry about dignity and self-actualization. And they carry these needs to work with them. They want achievement, recognition, advancement; they want the job itself to be gratifying. For a long time now, the vast majority of kids in this country have been growing up without being able even to conceive of doing the sort of work my mother did.

So that's part of your answer -- the employee part. Management looks around and sees these people coming in who have just as high expectations of what they want out of their work as management does. What's more, they see that these people, many of them, are just as smart as they are, if not smarter. So what do they do? Well, if they're the only company in town selling beer on a hot summer day, they probably don't have to do anything. They can keep the old classical organization. But if they're not the only company in town, or if they want to grow to be the only company in town, or if they are being kicked in the head by some company from another town, or another country, then sooner or later they're going to have to adjust to the needs of the people they're hiring to work for them, or go out of business.

INC.: What's the other part of the answer?

LABOVITZ: The other part has to do with the fact that more and more companies are realizing they can do themselves a big favor by developing better managers. They will learn something. There wasn't much that Pharoah's slaves could teach him about pyramid building. But that's not true any more. Nowadays, the troops know a whole lot more about what they do than supervisors do.

Recently, for instance, I was working on a program that I wanted to test out, and I asked a friend of mine, who's a hospital administrator here in Boston, if I could test it at his hospital. "What's your biggest problem?" I asked, and he said, "Well, the charges in the operating room are out of sight." So I went down and got 10 nurses together in a room near the operating theaters. "Ladies," I said, "I'm going to take you through a course that's gonna knock your socks off. We're going to teach you how to identify and solve problems right here, without waiting for management to do it for you! Now you're probably wondering which problem we should work on." I was going to teach them brainstorming, see. But then the nurse manager said, "We know what problem we should work on." And they were all kind of adamant about it, so I said, "OK, we'll skip Lesson One, Brainstorming. We'll get right to Lesson Two, which is, What's Causing the Problem? I will teach you a technique to figure out what's causing that problem." The nurses said, "We know what's causing the problem." "OK," I said, moving smartly to Lesson Three: "We'll do Cost Benefit Analysis." Whereupon they said, "But we already know what it's costing the hospital." At that point I cried, "Tilt! We'll stop right here. What the hell is going on?" And they explained to me that what they wanted to talk about was skyrocketing costs in the operating room; how the system they had for keeping track of charges to this or that patient was adequate when they had 1 operating room but lousy now that they had 10; how the book they used to find the prices in was as clumsy as an automobile-parts catalog and five years out of date; and how one nurse couldn't possibly account for every charge in 10 operating rooms; and so on and so on. So I asked, "How much are you billing now?" And they said they estimated that about half of what was being used in operations wasn't charged to anybody. So I said, "Well, how much does get charged?" About a million dollars a year, they said. "You mean there's another million . . ." I asked. And they replied: "You got it, consultant."

INC.: From the subordinates' point of view -- the nurses, for example -- why should they care whether or not they can save the hospital a million dollars?

LABOVITZ: They care because most people today want to be part of a quality organization. Of course, there are people, many people, who go to work five days this week so they can live two days this weekend, work 50 weeks so they can live 2 weeks, work 50 years so they can live after they're 65.To me, though, that's obscene. Most people want more out of their work.

INC.: But is that true? Managers worry a lot about motivation, but the whole idea of motivation rests on the assumption that people would rather be doing something other than working.

LABOVITZ: You got it. That's exactly the assumption that most managers bring with them.And it's a self-fulfilling prophecy. If you make that assumption when you come to work, then you will manage those people in a way that will guarantee that they'll act just the way you thought they would. Moreover, if that's your assumption, then you've got your managment style cut out for you. You'll have to be all over them like a rash. You'll never be able to turn your back on them. You'll be like a sergeant -- counting heads and kicking butts. Trouble is, that's all you'll be doing. You won't be making any money, that's for sure. Not in a dynamic economy.

INC.: This is pretty basic stuff you're talking about here.

LABOVITZ: Absolutely basic.

INC.: Then why is it that year after year we see managers running such incredible, unproductive, antagonistic organizations?

LABOVITZ: Because it's so much easier. You can understand why. It's a lot easier not to be approachable. It's a lot easier to hide in your tent and give orders and blame people when they don't carry them out. Anybody can yell, "Go take that hill!" You don't need years of training, you don't even need to think, in order to yell or say "Gotcha" when somebody screws up. But in today's world, actually taking the hill requires getting tighter with your own people, being a presence, being out there all the time. I'm a passionate believer in all this stuff. It works for me, here. It works for the clients -- not all the time, but often.

INC.: What do you mean "not all the time"?

LABOVITZ: Well, nobody bats 1,000. But when it doesn't work, it's usually because senior management is distracted, or middle management blows it up. One of our courses, for example, is not much more than a catalog of instances from the HEW report, Work in America, where managers have tried this stuff and seen it work. So we come in and give them the course, and then we meet with the guy in the privacy of his office, sometimes the guy who called us in the first place, and he says, "No way! There's no way I'm going to bring those turkeys in here. I tried it once and it didn't work." Well, I can understand that. He doesn't want to be a Theory Y person in what he sees as a Theory X universe. It makes him insecure. It can be very threatening to leave your office and go out among people who are a lot smarter than you are, who might tell you how you are screwing up. You might have to change, and people find it very hard to change. When you start to manage participatively, there's a power shift: Very often a lot of the influence and initiative shifts over to the subordinates, and this can be very hard to take. I've had the same feeling. You ask yourself, "Hey, who's running this place?" You get this uncomfortable feeling that somehow you're not in charge anymore, simply because you're not saying "Jump!" anymore, and they're not asking "How high?" -- which is what we've been brought up to believe bosses and employees should say to each other. Nothing we teach is very hard to understand. It's based on fundamental principles of human behavior, like the Golden Rule. But it's very, very hard to put into practice. But that's the price you have to pay if you've got these superordinate goals of profitability, survival, quality. And it does work. It even works with kids.

INC.: With kids?

LABOVITZ: Yeah, I remember one Control Data salesman who told me that he didn't know whether our material worked with big organizations, but it sure worked with his children. Every weekend he had been dragging his two boys up to Maine to clear some land. They hated going. They were always bitching and moaning. But after he saw one of our tapes on participative management, instead of telling them what to do, he would sit down with them and say, "Listen, this is what we've got to do. You figure out how to do it." And what happened? They went out and cleared the land.